The Bank of Canada has basically one job–to keep inflation under control.

But in the years since the recession, Canada’s central bank hasn’t been doing that as well as it did in the 10 years before the recession hit, according to report from the C.D. Howe Institute.

The reason for that may be that that the amount of money circulating in Canada’s economy, and the speed with which it moves, has become less predictable, says the report from the market-oriented think tank.

The Bank of Canada was successful in stabilizing inflation around its 2% target in the decade from 1997 to 2008, the report says. But inflation has been below target since 2012, except for a shift higher in May and June, which the Bank of Canada believes will prove transitory.

The difficulty the central bank has encountered with inflation in the last few years echoes the decade before 1997, the study says.

What the two periods have in common–and what’s different from the decade of success–is a breakdown in the connection between inflation and the amount of money in the economy, C.D. Howe says.

“The association between money growth and inflation has been weak since 2008, as it was in the decade before 1997,” the report says. “This is likely due to unpredictable changes in the velocity of money in Canada during the 1980s, and since the recent recession.”

“Velocity of money” sounds complex, but is really just how quickly money moves around the economy — from banks to businesses and consumers, who spend money and thus pass it along to other economic players.

During the stable, expansionary period from 1997 to 2008, money moved around the economy in a fairly predictable way. In the last few years, it’s slowed down. That’s been evident in the large cash balances that some corporations have built up, labeled “dead money” by former Bank of Canada Governor Mark Carney.

“The velocity’s gone down, and it might be one of the potential reasons our companies are sitting on more cash,” said Mati Dubrovinsky, senior policy analyst at C.D. Howe and the author of the report.

The Bank of Canada puts its monetary policy into effect by changing the cost of short-term money. When money is pooling up on corporate balance sheets and in banks rather than flowing freely through the economy, the central bank’s policy changes have less impact.

“The unpredictability of the velocity is likely what impedes the Bank from being able to control inflation as well as it used to,” said Mr. Dubrovinsky. “It is really the unpredictability of the velocity that makes monetary policy so complex and likely to misfire,” he said.

There may not be much the Bank of Canada can do about the velocity of money, or its tendency to short-circuit monetary policy moves, Mr. Dubrovnik said.

“The bank may be doing whatever is in its power. It’s just not possible to do any better,” he said.

But he says it would useful for the Bank of Canada to monitor the supply and velocity of money, both taking them into account in its policy making and discussing them in its publications, in order to make the central bank’s situation clearer for Canadians.

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Canada Real Time provides insight and analysis into what’s making news in Canada, a country punching above its weight on the world stage thanks to its vast resources and strong banking sector. Drawing on the expertise of The Wall Street Journal and Dow Jones Newswires, we take a look at developments in fields ranging from business to politics to culture. You can contact the editors at canadaeditors@dowjones.com